What a far-right Bolsonaro presidency in Brazil means for Canadian business

Presidential candidate Jair Bolsonaro arrives for a news conference in Rio de Janeiro on Oct. 11. He won a run-off vote on Sunday to become Brazil’s next president. (Leo Correa/Associated Press) Jair Bolsonaro, a far-right, seven-term congressman, won Brazil’s presidential election Sunday, giving him a convincing mandate to radically alter politics in Latin America’s most populous country.

Critics at home and abroad have lambasted the former paratrooper for his homophobic, racist and misogynist statements and his support for Brazil’s military dictatorship that ruled from 1964 to 1985. Supporters backed his pledge to crack down on crime and battle government corruption in South America’s largest economy.

For Canadian business, a Bolsonaro presidency could open new investment opportunities, especially in the resource sector, finance and infrastructure, as he has pledged to slash environmental regulations in the Amazon rainforest and privatize some government-owned companies.

"It could be a good time to be a mining investor in Brazil," said Anna Prusa, a former U.S. State Department official who now researches Brazil at the Wilson Center, a Washington, D.C.-based think-tank. "Bolsonaro has said pretty publicly he would like fewer restrictions … he is a recent convert to market liberalism." Jair Bolsonaro, ‘Brazil’s Trump,’ is on track to win the presidency. For Trudeau that spells trouble

Critics say investors, particularly in the resource sector, will be profiting from the destruction of the Amazon, the world’s largest rainforest, at the expense of the local Indigenous people and the planet’s health.

Here’s what Bolsonaro’s win could mean for Canadian business: Trade and investment

Canadian firms invested about $11.5 billion in Brazil last year, accounting for about one per cent of total foreign investment abroad, according to Global Affairs Canada. It’s mostly in mining, infrastructure, machinery, finance and technology, said Jean Daudelin, a Brazil expert at Carleton University.

Notable investments by Canadian firms in Brazil include Brookfield Asset Management, a Toronto-based property and infrastructure company with more than $40 billion invested in the South American giant’s shopping malls, homes and oil pipelines, according to Reuters . Artisanal miners separate gravel with sieves as they search for diamonds at an abandoned mine in Areinha, Minas Gerais state, Brazil. Canadian mining companies are likely to benefit from a Bolsonaro presidency, analysts said. (Felipe Dana/Associated Press) Brazil was the 13th-largest recipient of Canadian direct investment abroad. About 500 Canadian companies are active there.

As large countries exporting primary commodities, Brazil and Canada have frequently clashed on trade. In some respects, they’re natural competitors, particularly in agricultural products and mid-sized jet manufacturing.

Brazil invested $18.2 billion in Canada in 2017, accounting for 2.2 per cent of the foreign direct investment coming into the country, according to Global Affairs. Vale, a mining giant partially controlled by the Brazilian government, is arguably the highest profile Brazilian investor in Canada, with major nickel operations around Sudbury, Ont.

Bolsonaro’s victory is not expected to radically alter trading relations, said Daudelin. But Canadian companies in mining, agriculture and infrastructure could see new opportunities if Paulo Guedes, Bolsonaro’s chief economic adviser, is given full control over investment policy.

Holding a PhD in economics from the University of Chicago, Guedes has pushed for a wave of privatizations across Brazil’s state-dominated, highly regulated economy. He helped rally the country’s initially skeptical business class behind Bolsonaro, whose own economic leanings are thought to hew closer to Latin America’s past military leaders, favouring state intervention in the economy and control over what they consider strategic sectors like energy. A deforested area is seen near Novo Progresso, in Brazil’s northern state of Para, in 2009. Deforestation is expected to […]

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